An Explanation of Punitive Damages

In 2005, only 12% of people sought punitive damages in civil trials. When the plaintiffs won their cases, punitive damages were only awarded in 5% of the cases. This demonstrates how hard it is for people to obtain punitive damages in court today.

What Are Punitive Damages?

The court awards punitive damages as a way of punishing the defendant for its especially egregious behavior. Its purpose is to deter the defendant from acting in such a manner in the future, but it is also meant to discourage other persons or entities from engaging in the same type of behavior. As was demonstrated above, punitive damages aren’t awarded very often, but they will be considered when compensatory damages wouldn’t be enough to compensate the victim.

Compensatory damages are meant to compensate the victim for a loss or an injury. These include money for medical bills, lost wages and continued medical treatment. In some instances, the court doesn’t consider this to be adequate compensation because the defendant acted in a particularly heinous manner, and a personal injury lawyer can demonstrate that the defendant exercised gross negligence.

What Is Gross Negligence?

Gross negligence means that the defendant acted in a reckless manner and in a way that showed that they had a conscious disregard for the rights and safety of the people around them. General duty means that people have the obligation to behave carefully when they are around others, but gross negligence says that the person’s actions were even more dangerous.

When Are Punitive Damages Possible?

People may expect to obtain punitive damages if they are filing a personal injury claim. Sometimes, insurance companies have been known for taking advantage of victims of accidents, and the court believes that it is appropriate to punish them for acting in bad faith. That is because insurance companies are required to fulfill the promises in their contracts with their clients, but sometimes, they behave so badly that they breach the “implied covenant of good faith and fair dealing.”

How Are Punitive Damages Decided?

Juries are allowed to decide how much in punitive damages a defendant should be forced to pay a plaintiff. They are usually instructed to consider the defendant’s actions, the amount of money it would take to cause the defendant to refrain from repeating the action and the type of injury the plaintiff sustained.

As was mentioned above, punitive damages were awarded in 5% of cases in 2005. In one case, the Supreme Court advised lower courts to consider how reprehensible the defendant’s actions were as well as the ratio between the compensatory damages and the punitive damages.

Examples of Tort Reform

Some people believe that punitive damages should only be awarded when the defendant acted with “actual malice.” Florida is one of several states that places a cap on the amount of punitive damages that a plaintiff can be awarded. In this state, courts cannot award punitive damages that are three times the amount that the plaintiff received for compensatory damages.

Can Punitive Damages Be Limited?

As the jury deliberates about how much the defendant should pay in compensatory damages, it is not permitted to consider the defendant’s financial situation. This isn’t the case when a jury is deciding how much to award in punitive damages. It must consider the amount of money that the defendant currently has. Therefore, if a defendant has millions of dollars, the jury would be obligated to order them to pay a large sum of money for their outrageous behavior so that they will be deterred from repeating the action.

Some courts in California do not allow punitive damages to exceed 10% of the defendant’s net worth. In other states, punitive damages may not be more than two or three times the amount that was awarded in compensatory damages.

If you believe that the party responsible for your injuries acted in a manner that warrants punitive damages, you should consult with a personal injury lawyer. Contact the law firm of Rebenack, Aronow & Mascolo at (732) 247-3600 at our New Brunswick office or (908) 448-2560 at our Somerville office. Our attorneys will help you pick up the pieces of your shattered life.